How To Be A Tightwad And Why It’s About More Than Money

Cheapskate. Penny pincher. Tightwad.

I’ve heard them all. And these are the nice ones!

Society views these people as different. It’s assumed that because these individuals spend less money, they must also have fewer material possessions and therefore be less happy than everyone else!

But, tightwads have a bad rap and are completely misunderstood. They don’t conform to many of American cultures’ ideas. The primary one being, that extravagant spending leads to greater happiness and fulfillment in life.

What Is A Tightwad?

Merriam-Webster defines a tightwad as someone who is unwilling to spend money. Or an individual who is extremely frugal. (and proud of it!)

While this definition is true, it also doesn’t tell the full story. It fails to address why we behave the way we do, which leads you to a better understanding.

It’s no secret, tightwads don’t like spending money. We don’t find as much value in things as normal consumers do. Many believe that if they’ve lived well without a product their whole life, then they don’t need it or it won’t be as beneficial as the advertisement claims.

Instead, most tightwads are content with the things they have. When they do spend it’s on something meaningful. 

But, one thing is common among all tightwads. We find greater joy in saving money and creating wealth than we do spending! 

The Fulfillment Curve

Joe Dominguez and Vicki Robin first introduced the Fulfillment Curve in their book, Your Money or Your Life. Its main idea is that spending and happiness rise until you reach the point of enough. Once this stage of peak consumption gets reached, additional spending decreases the amount of joy you get by having more.

The first point on the Fulfillment Curve is survival. Like the Hierarchy of Financial Needs, it’s the position where your basic living requirements get met. Spending on things like a roof over your head, food to eat, and clothing to wear. Goods that are necessary for life and give you the greatest gain in happiness per dollar spent.

With your basic needs satisfied, you’ll look to improve your life further by purchasing comforts. These are goods that you want but don’t need for survival. Some examples include having more living space, a seasonal wardrobe, and dining out every once in a while.

As you continue up the curve, you’ll consume with greater extravagance. Instead of more square footage, you may choose to customize your home. Rather than buying clothes, you might spend on designer fashion. Or eating out could become dining at Michelin Star restaurants. 

The Fulfillment Curve shows that you’ll continue spending until you reach the point of enough. During this period you’ll get the least amount of joy per dollar that you spend. Once you have enough, you’re at optimal consumption and happiness. Additional spending will decrease the amount of satisfaction you receive from it.

For example, imagine you own a 10-year-old Toyota. It gets you from one point to the next, allows you to pick up groceries, and makes your life much easier. Then, one day you decide having a brand new Range Rover would make your life better. You’d be able to get around town in a 4 wheel drive vehicle, sit in leather seats, and have lots of storage. So you buy one, feel great, and reach the point of enough. 

But, what if you continued buying and ended up with 10 of them? You’d spend all your time keeping up with their tire rotations, oil changes, and maintenance. In the end, you’d be left with nothing buy headaches and auto repair bills!

Tightwads, Spendthrifts, and The Fulfillment Curve

Tightwads get labeled as close-fisted and stingy. Characteristics that stem from comparing how they’re different from the typical American consumer.

A tightwad is one side of the spending extreme. They consume less than a normal person. But, what if you consume more than normal?

The polar opposite of a tightwad is a spendthrift. Someone who society labels as consuming in an extravagant and irresponsible way.

Tightwads, normal consumers, and spendthrifts all differ in the amount of money they spend. Yet, they’re all spending to achieve the same thing, happiness.

Take a look at the Fulfillment Curve below. It has tightwads, normal consumers, and spendthrifts are all plotted together.

Notice how tightwads reach every point on the Fulfillment Curve faster than everyone else. They spend less, yet achieve the same level of happiness!

Also, tightwads use money more efficiently. For each dollar they spend, they receive a greater degree of joy. 

Normal consumers and spendthrifts have to buy more to receive the same degree of satisfaction. They spend more which affects their ability to save and delays their dreams!

How To Be A Tightwad

Society tells us that we must have certain items to be successful and feel happy. A message and money mindset that instills a sense of lack. When we believe something is missing, we will always want more.

But, the cure for this belief in scarcity is a practice of gratitude. Appreciating and being grateful for all that you have and the value it brings to your life. A shift that forces you to see the abundance you live in already!

Spending is a necessary part of life. You can’t buy everything you’re told to need, so you’ll have to create a strategy to determine what is important.

The first step is identifying your values. Write down the principles you live by and what you’ve determined to be most important in life. Then rank them in order, putting your top priority first.

Once your core beliefs get established, review your spending. List your top expenses and the amount you spend on each. Then, compare this list with your values.

Are the two in alignment? Are you spending according to your values and what you say is important? 

If you are, great! You’re consuming in the areas that make you happy. 

But If you aren’t, it’s time to change your habits. Consider how you can decrease spending in the categories that are out of order. Thus, not making them aligned with your priorities. Once you do, you’ll experience greater pleasure from the purchases you make.

Also, tightwads get a great deal of joy from preserving their capital. Try a money saving challenge and you may find that spending less has little effect on the way you feel. In fact, you may experience greater satisfaction from seeing your bank account grow and moving closer to your financial goals!

For most people, the goal of financial planning is to have enough money.  Sufficient cash to update your home, bankroll for travel expenses, and funds for your hobbies. All of which are things you believe will bring you joy.

Maybe it’s time we stop calling a budget a plan for your money and instead, a plan for your happiness!

What makes you a tightwad, spendthrift, or normal consumer? Comment below.